New levies on smartphones and tablets must compensate for Dutch home copying

Buyers of smartphones, tablets and MP3 players must pay a levy of up to ¬5 (US$6.5) in the Netherlands as of January 2013 to compensate for loss of income to the music and film industries caused by private copying, the Dutch ministry of Security and Justice announced on Thursday.

That constitutes a small price increase compared to plans in other European countries.

The Dutch cabinet planned to replace the current private copying levy as of January 2013 to replace it with a new system that is better adapted to technological developments. However, this plan was rejected by the parliament, leaving the cabinet no choice to introduce a new private copying levy, the ministry said.

"European rules determine that authors are entitled to fair compensation for damage caused by a member state that allows home copies," the ministry of Justice wrote. To keep complying with this regulation, it is necessary to add new devices to the levy list for the period of one year, pending further decisions on a better system.

The home copying system in the Netherlands has been frozen since 2008, making it impossible to add new devices to the list, which includes blank audio and video tapes, MiniDiscs and blank DVD-Rs and CD-Rs.

In the new system, iPads and other tablets with a storage capacity over 8GB will become ¬5 more expensive as will smartphones with more than 16GB and HDD recorders with over 160GB of storage. All PCs and laptops also will have a ¬5 levy. Tablets, smartphones and HDD recorders with less capacity will cost an additional ¬2.50.

Audio and video players with over 2GB storage become ¬2 more expensive and prices of external HDD Drives will rise ¬1. The lowest levies are for DVDs and CD-Rs: ¬0.03 per disc.

"Levies on analogue audio and video cassettes and MiniDiscs will disappear because they are hardly used in practice. Also, memory cards, USB sticks and game consoles with a hard drive are excluded from the system because these objects are only used to a small degree (less than 10 percent) for private copies," the ministry said.

E-readers are also excluded because the Dutch organization SONT, which advised the ministry on the levies, said private copying on e-readers at the moment is "still marginal," according to Fred Teeven, State Secretary for the Ministry of Security and Justice.

There are "dramatic differences" between European countries in the methodology used for identifying devices on which to impose levies, setting tariffs and allocating beneficiaries of the levy, concluded professor Martin Kretschmer of Bournemouth University in the U.K. in a 2011 study titled Private Copying and Fair Compensation that was commissioned by U.K's Intellectual Property Office (IPO).

There were levies on blank media in 22 E.U. countries, while 18 countries had a levy on MP3 players, 12 had levies on printers and four on PCs at the time the study was published. Revenues per capita from the levies varied between ¬0.02 in Romania and ¬2.6 in France, according to the study. "The distribution of levy revenues to recording artists is less than ¬0.01 per album," wrote Kretschmer.

Another difference between European countries is "fair compensation" per electronic device. While the Netherlands calculated that a ¬5 levy on tablets with more than 8GB storage should be sufficient, France reached a different conclusion.

According to French media reports, representatives of rights holders in September proposed to increase the levy on 64GB tablets from the current ¬12 to over ¬51 per device. Levies on 32GB tablets would be increased to almost ¬26 and under the same proposal, prices of 16GB tablets would be increased by almost ¬13 per device. Prices of smartphones could also be affected, with levies being increased to almost ¬13 for a 16GB smartphone and ¬32 for a 64GB smartphone.

Fees on memory cards and hard drives would also increase significantly. Opponents have called the proposal "ridiculous".

The proposed levy increases will be submitted for a vote by the French commission for private copying, which will have to determine if the proposed new levies are acceptable.

Loek is Amsterdam Correspondent and covers online privacy, intellectual property, open-source and online payment issues for the IDG News Service. Follow him on Twitter at @loekessers or email tips and comments to loek_essers@idg.com

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